Another balmy Nevada night marched towards dawn and the revellers at the Surrender nightclub showed no sign of flagging. Young women in bikinis and high heels and bare-chested young men danced to a blasting techno beat. Others splashed in the three tiered pools with inflatable lily pads and gyrated around stripper poles. The thirsty lined the bar with Jägerbomb cocktails.

"This is where you come for a party," Ajay Mistry, 25, an insurance strategist from London, shouted over the music. He wore sunglasses, an inflatable ring and a wide grin. "I see myself as a seasoned partier but you don't see this in England."

As he spoke a group of girls chased each other into a pool, laughing, pursued by a musclebound companion clutching four beers. It was 3.30am and things were just warming up.

Planet Las Vegas, in other words, continued to orbit as normal despite the storm on both sides of the Atlantic over the nude Prince Harry pictures. Moralists who may have hoped for at least a blush from Sin City were disappointed. It embraced the scandal with glee, adding the prince to the pantheon of celebrities who have sustained its image of Babylonian hedonism.

"Las Vegas is a place to celebrate adult freedom, freedom that even celebrities and royals can enjoy," said Cathy Tull, a spokesperson for the Las Vegas Convention and Visitors Authority.

As the city continued partying, however, and as Harry returned to England for the expected carpeting from Buckingham Palace and a rumoured head-to-head with his exasperated father Prince Charles, the question remained: why does this neon mecca in the desert so enthrall twentysomethings the world over?

There are, after all, equally racy alternatives such as Ibiza, Ios, Goa and Bangkok which are cheaper and often closer to home.

Las Vegas, with its fake architecture and near-zombified slot machine players, many of them elderly, could seem square in comparison. Yet it remains a magnet for foreigners who comprised about a quarter of last year's 38.9 million visitors, the second best on record. This year may surpass that with the help of Britons arriving on expanded BA flights and a new Virgin Atlantic route.

Las Vegas's response to the Harry brouhaha underlined its shrewd – critics would say shameless – marketing instincts. While the royal family tried to stop British newspapers from publishing photos that went viral on the internet, Sin City hailed Harry as a worthy son.

Tourism authorities placed an advert in USA Today on Friday saying fault lay not with the 27-year-old prince's decision to invite a hen party to his suite at the Encore Wynn resort and get naked but with the guest who snapped him – cupping his genitals in one image, bear-hugging a naked young woman in another – and sold the images to the gossip website TMZ.

It was, said the advert with mock solemnity, a violation of the code that what happens in Vegas stays in Vegas. "For shame! To those who traded in their pledge to their Las Vegas brethren, we deplore you! We are asking for a shun on these exploiters … we shall boycott partying of any kind with them. No bottle service. No bikini-clad girls. No Bucatini from Batali. In other words, we will not play with them any more."

In reality Las Vegas has adapted to an era in which visitors prefer to celebrate and often embroider their exploits on social media rather than hush them up. Bars and nightclubs have no prohibition against cameras or smartphones. The belief that all publicity is good publicity stretches back to the 1940s when fledgling casinos pitched the nearby atomic test blasts which broke their windows as another reason to visit. The city's official mascot was Miss Mushroom Cloud. Earlier this year it played up its mafia past by opening a mob museum.

"Vegas wants to fuel the notion that Three Finger Lenny could be at the blackjack table beside you ordering a hit, even though organised crime has had nothing to do with hotels here for 25 years," said Michael Green, a history professor at the University of Nevada.

The city, he said, thrived on selling fantasy. Just as its architecture mimicked Roman temples, Venetian canals and the Eiffel Tower, its reputation steeped visitors in the sensation of hedonism, regardless of what they actually did.

The in-your-face promotions of prostitution show sleaze is real but many if not most visitors avoid decadence. Many are families with young children. Others are elderly whose principal vices are slot machines and blackjack.

Even Harry, despite hysterical reactions implying he was Kubla Khan, behaved just like many bachelors his age. With the difference, of course, that he was third in line to the throne and did not have to trawl Expedia.com seeking bargains. Steve Wynn, the billionaire resort owner, waived his entourage's estimated £30,000 bill.

"He represents the British people more than anyone else [in the royal family]. I'd rather he did that than be uptight," said Mistry, the insurance strategist, as he partied in Surrender, the same club as Harry. "In England we like to think of ourselves as crazy partiers but in reality we're not. Very few go to a club and talk to someone new."

Las Vegas glinted with sexual promise but much of the appeal was great weather, indulgent bouncers and lack of queues, he said. "I'd say it's 25% to 30% about sex. Mainly it's about having fun with your friends."

The city generated an exhilaratingly unreal atmosphere. "When you're here you look at it like you're in the cinema," said Mistry.

It is a triumph of marketing that most would think of George Clooney in Ocean's Eleven or Sharon Stone in Casino rather than grittier scenes that could have been scripted by Roddy Doyle – such as two inebriated young Irishmen with shaved heads weaving out of Surrender yelling abuse at equally drunk Americans: "Ye Yankee fucks!"

In the wake of the Harry furore more Britons than ever seem keen to view the spectacle. Virgin Holidays reported a 30% spike in interest.

Mohamed Airoz, a 21-year-old from Saudi Arabia, sat on a ledge by the pool with wide-eyed awe watching others frolic. "This is the best place I have ever been," he said. "It's more than I expected. Much more."